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This article investigates the multiplier model in the context of the local impact of expenditures on sports infrastructure. There are two fundamental reasons for the lack of empirical evidence of large multiplier effects: inflated estimates of the direct effects, or the “base” increase in spending; and leakage from the local economy that diminishes the multiplier. The appropriate base expenditure of hosting a team in a city is the net new spending on local incomes and businesses plus local taxes paid. The effect of tax rates on the multiplier is less ambiguous. The full-time employment...

This article investigates the multiplier model in the context of the local impact of expenditures on sports infrastructure. There are two fundamental reasons for the lack of empirical evidence of large multiplier effects: inflated estimates of the direct effects, or the “base” increase in spending; and leakage from the local economy that diminishes the multiplier. The appropriate base expenditure of hosting a team in a city is the net new spending on local incomes and businesses plus local taxes paid. The effect of tax rates on the multiplier is less ambiguous. The full-time employment benefits are small, as the ratio of part-time to full-time employment is roughly ten to one. The role of government in stimulating economic growth has always been the subject of debate in macroeconomics. Local economic impact studies argue that stadium projects and playing host to a professional sports team are legitimate engines of economic growth.